The impact of pandemic and infectious diseases in economic growth: A neoclassical point of view

Abstract

We develop a neoclassical growth model introducing a Richard production function to describe the shock of pandemic and infectious diseases affecting the supply side. The model shows that in proportion of exogenous shock, countries with low level technologies in the productive sectors reduce the labor productivity and under some conditions may fall in a poverty trap. Whereas countries with high level technology also reduce the labor productivity but has faster recovery. We show that the incorporation of modern technology and improvements in human capital are necessary conditions to overcome the poverty trap.